Asia Markets recap: China stocks take real-estate slam

February 23, 2014, 7:52 PM ET

Shutterstock/Zhu Difeng

Welcome to the Asia Markets live blog, a running account of what the region’s stock markets are doing, along with other news. Today, Chinese markets in Hong Kong and Shanghai help lead declines, as real-estate and financial shares sell down.

Both Japan’s Nikkei Average and Australia’s S&P/ASX 200 spent a little time in negative territory during the opening minutes, but both are higher now, up 0.5% and 0.3%, respectively. (Read more on early Australian and Japanese trade here.)

Among movers in Tokyo, financial-services major Orix rose 2.1% after scoring a ratings-upgrade on its shares from Mitsubishi UFJ Morgan Stanley, which now rates the stock as outperform.

Another Mitsubishi UFJ upgrade to outperform boosted the fortunes of Sanrio, purveyor of Hello Kitty and other brands, which traded 3.3% higher.

Over in Sydney, Telstra and Wesfarmers were among those trading in the loss column as their shares went ex-dividend, but Bluescope Steel boogied 6.8% higher as improved Australian demand sent its fiscal first-half results back to profit. (Read more on earnings from Bluescope Steel and Caltex Australia here.)

Hong Kong’s Hang Seng Index was trading just a hair higher in the premarket, but now it’s down 0.9%, tracking a 1.6% pullback in the Shanghai Composite.

The reason for the pullback seems tied to new-home-price data released at the market open. On the face of it, the data weren’t so bearish, with average prices up 0.4% in January for a 9% gain from the year-earlier period.

But Andrew Sullivan of Kim Eng Securities sees other factors at work: “Whilst China property prices continue to rise, the market is watching the tightening and the start of discounting as being the driver as the Shanghai press [is] reporting tightening of loans by the banks.”

He adds: “Our man in Shanghai was out visiting sites recently, and he tells me that projects are staring to cut prices,” while tightening liquidity is also hurting the sector.

Among the losers, China Overseas Land is down 3.8%, China Resources Land is off 5.5%, and Agile Property is taking a punishing 8.3% sell-down.

On the upside, though, Belle International is higher by 3.1% thanks to a gain in 2013 net profit and, more importantly, an almost 1-percentage-point rise in gross margins for China’s top maker of women’s shoes.

China’s property market is starting to sweat, and the sense of fear is showing up in stock moves today.

Stubbornly high property prices, as seen by data out Monday, have triggered worries that a fresh round of market curbs by Beijing is looming. And this is on top of less access to financing for both developers and home buyers.

For a fifth consecutive day, China’s central weather service on Monday issued the alert for heavy air pollution in the north and east of the country.

Meanwhile, Beijing, one of the cities most affected by the toxic fog, is seeing a surge in patients with respiratory problems.

The respirotary units at Beijing’s hospitals were packed over the past few days, with the number of patients reporting asthma and emphysema soaring by 30% to 40%, according to the Beijing Daily, the city’s official Communist Party newspaper.

The Beijing Disease Contral Center has advised the eldly and children to stay indoors, and for all residents to wear gauze masks when out in the open “air.”

On Friday, Beijing launched its first emergency response plan in history to cope with the pollution problem. The city government has ordered heavily polluting factories to shut down, and for construction sites to limit activities, hoping to reduce emissions and dust during hazardous pollution days.

Just a heads-up: HSBC is slated to post its fourth-quarter earning after the close of Hong Kong trade.

Last quarter saw a juicy 28% rise for the Hang Seng Index’s top-weighted component, though underlying revenue was more or less flat from a year earlier. (See detailed results here.)

This time around, Kim Eng Securities (its second mention in today’s blog!) is citing a consensus forecast of $17.6 billion for net profit, though the broker itself is tipping just $16.6 billion. Its lowball projection is in part because they see HSBC incurring roughly twice the regulatory costs as cited in the average estimate.

Listen up, conspiracy theorists: A Chinese admiral says the nation’s deadly smog problem is actually a good thing when it comes to defending the country.

Navy Maj-Gen. Zhang Zhaozhong was quoted in reports as saying the polluted air plaguing large swaths of the country would significantly cut into the accuracy of a new futuristic U.S. laser canon (the first of which is set to be deployed this summer aboard the interestingly named USS Ponce).

“Under conditions where there is no smog, a laser weapon can fire [at a range of] 10 kilometers. When there’s smog, it’s only one kilometer. What’s the point of making this kind of weapon?” the South China Morning Post quoted Zhang as saying.

The same SCMP report also notes that the admiral’s comments “immediately drew criticism” on Chinese social media, prompting Zhang to respond: “I just stated a laser weapon’s weakness. … I don’t support smog.”

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